Where Are Cannabis Businesses Allowed?

November 8, 2022
Photo by Kindel Media from Pexels

If you want to start a business in the burgeoning cannabis industry, there are many factors to consider. The process requires patience, planning, and attention to detail. As each state that has legalized recreational cannabis has its own set of laws, regulations, and taxes for prospective cannabis businesses, we lay down the critical information you need to launch a cannabis business in the U.S.

The Key 4 Types of Cannabis Businesses to Consider

Let’s first take a look at the four types of cannabis businesses you can launch:

  1. Breeding. Cannabis breeders work on the genetic side of the industry. They are in charge of developing the quality of seeds and specific strains of cannabis that will be grown by cultivators.
  2. Cultivators. Those are the farmers who physically grow the cannabis. Cultivators are responsible for growing and harvesting high-quality cannabis that can then be sold wholesale to extractors and dispensaries, from small farms to large-scale operations.
  3. Dispensaries. The term stands for cannabis industry retail stores with direct contact with the consumer. Dispensaries sell cannabis in a variety of ways. Think of brick-and-mortar stores and online cannabis sales.

    Typically, you’ll also need to employ budtenders with product knowledge to assist customers in finding what they are looking for. See the best weed dispensary in San Francisco to get inspired and overcome competitors.
  4. Extractors. Extractors transform raw cannabis into a wide range of finished products such as concentrates, oils, edibles, and topical applications. They use various methods to isolate terpenes and cannabinoids from raw cannabis plant matter to create ready-to-sell products.

The choice of business you launch will define the design strategy and regulations to comply with.

Which States Allow Cannabis Businesses?

The National Organization for the Reform of Marijuana Laws (NORML) reports that 37 states and the District of Columbia have medical marijuana laws, as do four US territories: Puerto Rico, the Virgin Islands, Guam, and the Northern Mariana Islands.

A dozen states allow limited access to products containing low levels of THC, the substance with the most impact on a person’s mental state. To find out whether you can launch your business, you should research its legislation regarding distribution.

What Are The Best States to Launch Cannabis Business?

Check out this list to see which state works best for you to launch a cannabis business there.

  • Arizona. The state generated $406 million in sales in its first year upon legalization, making it an attractive investment place. Any business in Arizona that wishes to sell medical marijuana or adult-use marijuana products must obtain a license from the Arizona Department of Health Services (ADHS). After receiving an ADHS license, the business can apply for a transaction privilege tax (TPT) license with the Arizona Department of Revenue (ADOR).
  • New Jersey. New Jersey is another newcomer to the recreational cannabis scene, having legalized adult-use marijuana in November 2020. Because of its dense population in the Northeast and relatively low taxes, this state has a lot of opportunities for businesses looking to enter the market. According to analysts, New Jersey could generate $1 billion in annual cannabis sales by 2024.
  • New York. New York is one of the newest states to enter the recreational cannabis market, and they have passed one of the most progressive legalization frameworks in the country. Moreover, the state is now becoming one of the country’s healthiest cannabis markets, with plenty of demand to support various new cannabis businesses.

You must first obtain a conditional adult-use retail dispensary license in New York before you can open a dispensary. An applicant must meet the qualifying business or nonprofit criteria to apply.

  • Alaska. Alaskan adults over 21 are permitted to possess and distribute up to an ounce of marijuana and grow up to six marijuana plants, though only three of those plants may be mature. Retail sales at licensed dispensaries are legal. The state imposes an excise tax on the drug, which the cultivator must pay.

After all, the state has the highest number of retail cannabis shops per capita in the country. Yet, industry insiders say the industry is highly competitive, and cannabis entrepreneurs must be astute to keep their businesses afloat. Thus, you will have to invest a lot in marketing your business correctly to overcome the competitors faster.


As of February 2022, the use of cannabis for medical purposes is legal in 37 states, four of the five permanently inhabited U.S. territories, and the District of Columbia in the United States.





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